Mahendran said Sri Lanka hoped to reduce dependence on markets going forward, with higher revenue collections. Taxes are expected to be simplified in the January 29 budget.

He said interest rates in Western markets were low.

"There is no shortage of people out there who are willing to lend money to us," Mahendran said. "Of course we have to be judicious in our borrowings to see that we do not overpay the rates of interest that we pay."

He said Sri Lanka's government will shrink the budget deficit over time, which will improve confidence of foreign lenders.

A recent reduction in fuel prices came from falling raw material prices and not from tax reductions, he said.